Which statement represents most correctly the relationship between nominal GDP and real GDP?
a. Nominal GDP measures base-year production using base-year prices, whereas real GDP measures current production using current prices.
b. Nominal GDP measures current production using base-year prices, whereas real GDP measures current production using current prices.
c. Nominal GDP measures current production using current prices, whereas real GDP measures current production using base-year prices.
d. Nominal GDP measures current production using current prices, whereas real GDP measures base-year production using base-year prices.
C
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In the Harrod-Domar model, if the savings rate is 20% and the incremental capital output ratio is five, abstracting from depreciation, what is the implied growth rate?
What will be an ideal response?
Refer to Figure 8.1. At the profit-maximizing level of output, total profit is
A) -$120. B) $0. C) $432. D) $600. E) $603.
Which of the following is a characteristic of an LDC?
a. Capital flight. b. Vicious circle of poverty. c. Lack of entrepreneurs. d. All of these.
The production possibilities curve tells us that if full employment exists and a nation wishes to permanently increase its production of military goods, it must
A. also increase its production of nonmilitary goods. B. reduce its output of nonmilitary goods. C. suffer inflation. D. suffer unemployment.